Economic outlook ’worsened considerably’ as tariff impact fuels uncertainty: Fed

Published 23/04/2025, 19:18
© Reuters

Investing.com - The economic outlook "worsened considerably," driven by concerns about the impact of tariffs just as inflation picked up pace ahead of an expected rise in input costs for businesses according to the Federal Reserve’s Beige Book released Wednesday.

The economic outlook in "several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose," the Fed said in its Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Apr. 14.

The rising economic uncertainty is also beginning to filter through to the labor market, with "several districts reporting that firms were taking a wait-and-see approach to employment, pausing or slowing hiring until there is more clarity on economic conditions," the report said.

While employment was little "changed to up slightly" in most districts since the prior report, consumer-facing firms had slowing hiring relative to business-to-business firms.

On the inflation front, meanwhile, prices increased across districts, with most distracts bracing for further prices pressures driven by "elevated input cost growth resulting from tariffs."

Most businesses, however expected to pass through additional costs to customers, though consumer-facing firms reported margin compression following an increase in costs and tepid demand. 

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